The FINANCIAL - Tea Gurieli Preparing to Enter The Russian Market

Tea Gurieli Preparing to Enter The Russian Market

Tea Gurieli Preparing to Enter The Russian Market

The FINANCIAL -- Geoplant LLC, producer of Georgian tea under the brand name Gurieli, is planning to have a 15 % growth of sales on the local market and increasing its share form 12 – 14 % in 2014. This year the company launched its premium segment tea Prince Gurieli along with the herbal tea line.

In addition, Gurieli is preparing to enter the Russian marketfor the first time this year. Mikheil Chkuaseli, CEO of Geoplant, appeals to the Government for support from the tribune of The FINANCIAL.

Geoplant was founded in 2008. During the process of itsestablishment, the management of the company had two goals. “The first was to create a high quality product. This would be of crucial importance as consumers would once again become the customers of a Georgian tea brand. We needed to create a brand that could be trusted,a brand that would incorporate values, not only for the company but also for the society. We wanted to create a brand that would become synonymous with quality and become truly valued by customers, as our productsunitetop quality, unique packagingand eco-friendliness. The mission aspired to our brand was to represent provide the healthiest drink of the millennium to the world, by blending finest Georgian tea from the environmentally-friendly, best tea plantations of rural Georgia with famous teas produced across the planet. We see ourselves as partners with our valued customers, employees and community, promoting healthier lifestyle and helping them to lead happier lives. Now, four years later, we see that our strategy has been successful so far, we will continue striving towards fulfilling our mission by creating valuable products and establishing highest quality standards in food manufacture,” said Chkuaseli.

“To restore an erstwhile traditional field in Georgia was our main mission. We wanted to get our fellow citizens in Guria, Imereti and Samegrelo back to the work in which they used to be traditionally engaged. We wanted to improve their social welfare. We wanted the Gurieli brand to become associated with high quality national product and to return the Georgian tea to the global map of tea-producing countries,” he said.

“Today we are proud that we have managed tocreate a truly valuable brand. Gurieli is the epitome of high class today. Customers associate it with a Georgian product of high quality. All this assures us that we had the right marketing strategy from the beginning.With proper financial support we have all the conditions necessary to be successful on both thelocal and international markets,” Chkuaseli told The FINANCIAL.

In his exclusive interview with The FINANCIAL, Chkuaseli underlined the main advantages of the Gurieli teas, which has been honoured with a Golden Brand award for four consecutive years, and talked about the difficulties encountered in this sector.

The company’s turnover in 2013 amounted to GEL 3,978,665.

“In 2014, we issued the new product Prince Gurieli for the premium segment of the market. At the initial stage we offer highest qualityblack and green teas in exclusive tin packaging, developed by Ogilvy Ukraine. For the first time in the history of Georgian tea we have started producing the so-called pyra-packs, loose tea packaged in pyramid tea bags for retaining the best taste. Throughout the year, we will be offeringour customers fruit, herbal and other sorts of teas in these pyramid bags as well,” said Chuaseli.

“Moreover, we launched the “Gurieli Herbal Tea” line and offer mint, chamomile and alpine teas, which are uniquely blended with the best Georgian green tea. All of the plants are grown in Georgia. They are hand-picked in ecologically clean environment, carefully processed without any additives, emulsifiers and without chemicals or poisons,” he added.

While the Georgian tea market is saturated with imported products Chkuaseli opposes any restrictions imposed on the import of any goods.

“Gurieli was founded when there was nodirect assistance from the Ministry of Agriculture for the sector at all. No special project existed for the support of the Georgian tea sector. Moreover, therewere no tax privileges.What we did was we applied for a privileged loan programme issued by the Government. After meeting all oftheir demands we received a USD 1,200,000 credit line with 9% interest rate. The majority of direct investments came from our partners. The Ministry of Agriculture currently offerssimilar projects now with even better conditions,” said Chkuaseli.

Nevertheless, Chkuaseli thinks that it is better for the Ministry of Agriculture to have a strategic vision towards development of the sector. “Market conditions inrecenttimes have caused excessive restructuring. A large number of tea plantations were rooted outand otherrural-agricultural crops were cultivated instead. However, there are still sufficient numbers of tea plantations that are being neglected. Tea plantations that are in the high mountainous regions have an added ecological function. They can prevent the erosion of soil in those areas. These areas can be used as sources of income. Especially when we are referringto mountainous villages, as they are generally considered to be producing less cropsand have littlesoil, but are often good for tea cultivation.”

Chkuaseli objects to any subsidies. He considers it to be an incorrect practice. As opposed to that, he suggests that the Government could encourage export, for example by repayingcustom taxes in some countries. “The Ministry of Agriculture implemented export stimulating campaigns. Currently the Ministry has huge marketing expenditure on wine products, for their participation in international exhibitions and other events. I would like toappeal to the Ministry and ask them to pay even a quarter of this attention to the tea sector. I guarantee that Georgian tea will be equally presented and will gain huge interest internationally.”

“Also, cheap credit can be configured so as to be reconstituted. Today, packing capacities and, innovations are a constant challenge for us. We are part of this process. Responding to them is very important. The minimum cost of a used packing plant is EUR 250,000. More tailored projects should be carried out so as to become technologically better-equipped. More support isrequired for already-operating and successful manufacturers. Start-up companies need other supporting conditions in order to evolve, while strong companies need support in order to fully utilize their potential,” Chkuaselisaid.

“With rich natural resources, manufacturing and packaging capacities, scientific innovation and potential of the brand’s further development, Geoplant is the leader in tea production in Georgia and the whole of the Caucasus,” said Chkuaseli.

“Geoplant has been developing close relationships with private and state-owned tea manufacturing companies throughout the world. The list of our partners includes: Plantextrakt GMBH (Germany);VanReesNorthAmerica (Lipton, USA);MartinBauer (Germany);DobriniaDar (Ukraine);MartinBauerMiddleEast (Turkey) and others. In addition, our products are exported to over ten countries in Eastern and Western Europe and to former Soviet Union countries. Our teas are exported to France, Germany, England, the Czech Republic, and the Baltic countries - Estonia, Latvia and Lithuania. We signed a memorandum with Wildfig Holding, which allows them to be exclusive importers of Georgian tea in the South African states.”

The company is actively preparing to enter the Russian market. Management is running negotiations right now. In Chkuaseli’s words, there is a high interest from their Russian partners. Geoplant plans to enter the Russian market during the current year.

Chkuaseli distinguished various reasons which make the tea Gurieli special. “Gurieli teas are cultivated in an ecologically clean environment. They are harvested by hand and are produced without chemical additives. This distinguishes our product. The care - cultivation and processing is in line with our rich experience and advanced technologies. The company has acquired modern Italian packaging equipment (IMA).”

“We use modern German aromatization technology. Gurieli includes only natural aromatic compounds. We are actively cooperating with the Georgian Tea and Subtropical Crops Research Institute. It is the only research institute in the whole of Eastern Europe. By our cooperation with scientific centres and our own laboratory,we constantly control and ensure the quality of our products as well as the diversity of our tea range,” he added.

Approximately 0.5 kg of tea is consumed by an average citizen annually. However, the market is differentiated.

“Geoplant is distributing its products throughout the whole territory of Georgia, except for the Abkhazia and Tskhinvali regions. We made active steps to acquire the Marneuli, Bolnisi and Gardabani regions. Creating a product that would compete with the tea imported from Azerbaijan in these three regions was one of the main goals of the companyduring 2012. The tea consumption of this region is 40-45% of the total share,” said Chkuaseli.

“These regions are mostly inhabited by ethnic Azerbaijanis. Tea is an integral part of their local culture and traditions. After proper work on tea taste, colour and aroma, we have created a new brand - Ali Sultan. Among other things, the packaging design of Ali Sultan also stands out. The company developed a market entry strategy and the new product successfully went on sale in February 2013. We have already acquired a certain position on this specific market,” Chkuaseli told The FINANCIAL.